We all know that our healthcare industry is shifting away from paying for volume and towards paying for value. But what exactly does this mean? Truth is, there remain many unresolved questions surrounding the "volume to value" shift and at the top of the list are those surrounding accountable care organization (ACOs.)
According to the experts at Leavitt Partners, "an ACO is formed when a group of health care providers (physicians, hospitals, non-physician providers, etc.) come together and collectively agree to become responsible for the financial and quality outcomes for a defined population." Or in other words, an ACO is an emerging alternative value-based payment model that holds providers financially accountable for the cost and quality of care they deliver to a defined population. While participation in an ACO remains voluntary, it has grown steadily over the past several years and its projected growth over the next few years has led many healthcare providers to wonder if now is the right time to join the ACO movement?
This decision raises several important questions for a healthcare organization: Do you participate in a Medicare or Medicaid ACO program, one driven by private payers, or both? Do you pursue this on your own or seek partnerships with other providers? What investments might be necessary to fully embrace a quality mindset? With these questions in mind, providers must be intentional in how they move forward in order to be successful in risk-based arrangements.
Over the next few months, my colleagues and I at NextGen Healthcare will outline an ACO roadmap, discussing ways to strategically tackle start up, prioritize patient-centered and quality care, leverage technology, and meet key milestones. After reading this article series, organization leaders should come away with practical tactics for launching an ACO program and delivering value-based care.
Shaping an ACO Strategy
Going "at-risk" and succeeding in the ACO model requires not only prudent planning, but also business transformation. And as with any large-scale business transformation initiative, the first step toward becoming an ACO should always be information gathering, research, and analysis with the goal being to craft an ACO strategy that dovetails with an organization's goals and objectives. The following sections detail three actions organizations can take to strategically position themselves for this transformation.
Gather external intelligence. Because an ACO is formed only when providers contract with payers to go "at-risk" for cost and quality, the conversation needs to start with the payers. And because there are numerous payers in the market and the ACO is still a relatively new and an evolving payment model, there are numerous different ACO models in the marketplace today. For example, Medicare currently has six different models: the Medicare Shared Savings Program, ACO Investment Model, Advance Payment ACO Model, Comprehensive ESRD Care Initiative, Next Generation ACO Model, and the Pioneer ACO Model. Medicaid and private payers also offer different choices--the details of which can vary depending on the market.
As a crucial first step, organizations should spend time familiarizing themselves with these different ACO structures. The level of risk, quality provisions, beneficiary assignment process, and scope of services will be among the key differentiators between different ACO contracts.
After gaining a working knowledge of the different models, organizations should then dig deeper to uncover what ACOs already exist in their community and what private payers are offering in their specific market. Checking publicly available CMS data that reports the past performance of Medicare's ACOs could also be worthwhile. By taking the time for due diligence, an organization can get a better grasp of the competitive landscape and settle on what the next steps should be.
Conduct an internal review. After looking externally, an organization should turn its attention inward, closely examining existing operations and determining how they would need to change to accommodate an ACO. Some things to review include: how the organization currently measures and communicates quality, leverages technology, and engages patients in their care. Moreover, because ACO contracts focus on total cost of care, organizations need to know the costs involved with caring for different patient populations and calculate how shifting to a proactive, quality-based approach might alter not only revenue, but costs. At the end of this analysis, an organization should have a greater understanding of how their practice would need to change to embrace the ACO model.
Learn from experience. Payers understand that this ACO transition isn't easy for providers and that it won't happen overnight. In an attempt to ease this transition and help organizations can get their feet wet with outcomes-driven payment, they have created programs to tie existing fee-for-service payments to value. For Medicare physicians, close to 10 percent of their future Medicare payments are tied to their current performance in the Meaningful Use (MU), Physician Quality Reporting System (PQRS), and Physician Value Based Payment Modifier (VBM) programs. Beyond penalties, payers have also created new fee-for-service revenue opportunities with programs they believe amount to building blocks for value-based care. The Patient-Centered Medical Home (PCMH) program and Medicare's new chronic care management (CCM) code are examples of such programs where organizations can receive fee-for-service incentive payments today while also developing the competencies needed to go "at-risk" in an ACO.
Participating in these existing penalty and incentive programs will allows an organization to maximize their reimbursements under the current fee-for-service system while simultaneously "practicing" with accountable care. Identifying blind spots, pinpointing red flags, and shoring up weaknesses can help practices address any issues before it puts more of its reimbursement dollars at risk.
Make the Commitment
Once an organization has armed itself with knowledge, it must decide whether becoming an ACO is proper decision. Keep in mind that while the ACO movement is very real, it is still unproven and the model itself is subject to changes. Nonetheless, healthcare payers are moving closer to value-based models every day and the sooner organizations can wrap their heads around these concepts, the more time they will have to work through all the challenges and nuances.
Next, the organization must focus on how it will engage patients and ensure quality--two essential elements for ACO success. The subsequent article in this series will tackle this topic, providing strategies for bolstering patient involvement, improving patient management, and meeting clinical quality measures.